According to ‘The Nationwide Building Society’, if house buyers in London want to avoid paying higher interest rates, they would have to stump up fairly higher deposit on a mortgage. The past indicates that the Nationwide put down a deposit of 10% or more of the property value, thereby offering some of its best rates to borrowers. At present, the deposit has been raised to an enormous 25%, which means that an average Londoner would have to manage a deposit of almost £75,000 in order to qualify for lower interest rates.
This move is all set to ‘hit’ the average first-time buyer the hardest, as it would reduce their ‘affordability’ to a great extent. Most first-time buyers, who cannot possibly afford this sort of deposit, would have to suffer financial penalties on their mortgage loans by way of higher rates of interest. It is the result of the global credit crunch, which has had an effect on all money markets that the move by Nationwide would lead to an increasingly stringent lending criterion that lenders may put into place.
According to homeloanme.blogspot.com Rising defaults and chaos in the money markets are the main reasons behind the clampdown on mortgage borrowing. Trends in the past few weeks indicate that a number of other mortgage lenders have announced that they would remove the whopping 125% mortgages from the market, in case the borrower was able to combine a mortgage loan and an unsecured loan. After Christmas, many other lenders have announced that they would no longer be offering 100% mortgages; in a move to cash in to first-time buyers who have no deposit to put down on their first property.
For most first-time buyers, with no previous property or equity to rely, are in a tight spot - they would not only need some form of deposit to secure an affordable mortgage, but also a pretty hefty deposit. The move by Nationwide would affect new borrowers who, if unable to raise the 25% deposit, would be put onto the higher rates and miss out on the benefits of the recent interest rate cut. At present, the deposit has been raised to an enormous 25%, which means that an average Londoner would have to manage a deposit of almost £75,000 in order to qualify for lower interest rates.
According to an official of the Nationwide, the building society had to adapt and respond to market changes, like other lenders, with respect to the increased difficulties and cost in securing funding. According to paydayloansinformation.blogspot.com the trends in the past few weeks indicate that a number of other mortgage lenders have announced that they would remove the whopping 125% mortgages from the market, in case the borrower was able to combine a mortgage loan and an unsecured loan.
Rising defaults and chaos in the money markets are the main reasons behind the clampdown on mortgage borrowing. After Christmas, many other lenders have announced that they would no longer be offering 100% mortgages; in a move to cash in to first-time buyers who have no deposit to put down on their first property.
